If you are going to use wonder under and blanket stitch the edges, then you cut directly on the line of the finished shape UNLESS the pieces go under other pieces. If a piece goes under another applique shape you must leave a 1/4 inch seam allowance to go under the piece that goes on top. You will need to make a master plan for yourself on which pieces get stitched down first (bottom) and then the order of pieces that get stitched on top.